Saturday, March 03, 2007

New Communists Love Profit

Spiegel Online publishes a lengthy article looking at the rise and present condition of the Chinese economy. The Chinese Communist Party comes to understand that the answer to poverty is wealth and that creating wealth requires profits. The details of how they implement their new understanding involve obtaining (by any necessary means) the knowledge of the western world, then enticing the money of the western world into China. It also requires The Communist Party preserve their absolute unchallenged control of the country.

Red China, Inc.: The nine men -- who constitute the Standing Committee of the Communist Party's Politburo, the most-powerful political body in the Middle Kingdom -- meet in the southern section of this refuge. Their discreet meeting is businesslike. The group's members were not elected by the people and they are not interested in being observed while governing.

With their country, which amounts to a gigantic, low-cost factory, they have already managed to accumulate more than $1 trillion in foreign currency reserves. In theory, at least, the communist People's Republic of China, has now joined the United States, the global capitalist superpower, in deciding the fate of the world's leading currency.

The explosive growth of the Chinese economy has essentially been pure 'make money' pragmatism, where the government clears all barriers to proposals they approve and bail out failures when they occur. It involves tolerating some private ownership of obedient small business operations while continuing to prohibit private ownership of land. Workers are in abundant supply and by law can not go on strike. It also requires a Party apparatus so large and unwieldy that size alone predisposes towards inefficiency and corruption.

Corruption also runs rampant when it comes to building new neighborhoods, factories, airports and highways. Communist Party officials have the power to award contracts, and they utilize their power to fill their own pockets. Researchers at the State Council, the Academy of Social Sciences and the Communist Party's central university determined that of the 3,220 Chinese with assets totaling more than €10 million, 2,932 are relatives of senior party officials.

The Politburo is engineering what they call a "social market economy with Chinese characteristics" in pursuit of a "harmonious society." This last week the United States stock market experiences the worst sell off in the last four years. Maybe it is a good time to remind everyone that 91% of the new multi-millionaires in China are relatives of the most powerful communists and those funds are not sitting idle underneath some mattress.